Google Play revenue surges, but still far short of Apple

Google's app store revenues are growing much faster than those of Apple Inc, but Apple still dominates overall sales, market research data taken from the first three months of the year shows.

The app stores collectively raked in $2.2 billion in the first three months of 2013, according to Canalys, a market researcher.

The firm says Apple's App Store generated $1.48 billion of revenue, accounting for 74 percent of $2.2 billion earnings that the app stores collectively made in the January-March period. Revenue generated from Google Play amounted to 18 percent.

Separate data from App Annie, an analytics firm, showed Google's app store revenues were 38.5 percent of Apple's, a big gain from a year ago when it was worth just a tenth of Apple's, as its free Android mobile operating system helped it win nearly 70 percent of the global mobile market.

Fuelled by roaring growth of Android mobile devices, largely manufactured by Samsung Electronics and up-and-coming rivals, Google Play revenues jumped 90 percent in the first quarter from the fourth quarter, according to App Annie.

Apple's app store revenues grew by a quarter in the same period, compounding worries for the firm, whose share price has fallen 11.8 percent so far in April on fears about weakening demand for its hardware staples, the iPhone and iPad.

"Although Google is catching up, Apple has such a head-start in revenues that, on present trends, we would not expect Google to overtake Apple until sometime in 2016," Adam Daum, chief analyst at Canalys, told Reuters in an email interview.

Apple's continued dominance in revenues, despite the popularity of Android-propelled devices, was largely due to its simpler payment system.

"In terms of downloads, Google Play has caught up to 90 percent of Apple's, and will close the gap soon, but this hasn't translated to revenues," said Oliver Lo, a Beijing-based Vice President at App Annie.

Lo said that a higher percentage of iPhone or iPad users, usually more affluent than the average smartphone user, had registered their credit cards on their Apple accounts, making it easier and more likely for them to purchase apps.

Google, on the other hand, relies on more varied payment methods including Google Wallet, credit card purchases and carrier billing.

Spending on games in Japan and South Korea, Android's top markets, helped Google Play's earnings, a trend that is seen continuing this year.

"There's plenty of room for growth in Japan which will add new users as the smartphone penetration rates are only about 30 percent," said Rim Ho-won, an analyst at CIMB Securities in Seoul.

He added that South Korea, which boasts one of the highest smartphone penetration rates in the world at 80 percent, would also see robust growth on the back of its mobile game-craze.

Games account for 90-95 percent of revenues from Japan and South Korea, which are the most heavily game-skewed markets.

App market operators such as Google and Apple generally take 30 percent of the revenues, and the remainder goes to the app developers.